(Bloomberg) — Retail investors are refusing to let go of their commitment to Reddit favorites GameStop Corp. and AMC Entertainment Holdings Inc., propelling shares to their highest levels in months.
GameStop shares rallied as much as 10.3% to $231.04 at 9:32 a.m. in New York while AMC rose 9.7% to $18, adding to recent gains. The jumps came as investors increasingly touted the stocks on social media platforms, using hashtags like #AMC500k on Twitter and pumping their bets in trader chatrooms on Stocktwits and Reddit’s WallStreetBets.
“It looks like the Reddit Raiders are at it again,” says Michael Pachter, analyst at Wedbush Securities. The pair of companies were among the market’s most actively traded stocks early Wednesday after volumes continued to soar. AMC has surged 43% so far this month while GameStop shares have rallied 24%, that compares to the S&P 500 which is flat.
The gains are sure to bring more pain for short-sellers betting against the companies who have already seen $6.8 billion in mark-to-market losses this year, according to S3 Partners. With the retail investor movement regaining steam and both companies having high short interest, there’s potential for a short squeeze, S3 Partners’ managing director of predictive analytics Ihor Dusaniwsky said by email.
“Short sellers may start trimming their positions in the face of continued stock price strength,” he said. Short-sellers have seen mark-to-market losses of about $475 million for the month of May alone, S3 Partners data show.
The pair of stocks have been the best performers in a basket of 37 so-called meme stocks tracked by Bloomberg over the past month. The group’s 5.4% rally on Tuesday pushed it above its 50-day moving average for the first time since March.
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